Living in Japan often involves encountering unfamiliar business customs. For example, when you search for a rental room, you will find one of those customs, “Reikin” or ”Key money”, which you pay the landlord depending on your rental agreement. Reikin has been a common business practice in Japan, so you must consider the payment while looking for a property.
What’s Reikin (Key money)?
Reikin(礼金 Rei-kin) is a fee that a tenant pays the landlord for gratitude. When renting a property, Reikin is typically paid along with a deposit (called Shikikin). As a gratuity, Reikin is a non-returnable fee, paid only once at signing a lease contract. The fee rate for Reikin is not regulated by law, so landlords determine the amount that will be equivalent to one or two months of rent. Also, some landlords choose not to require Reikin.
Why do I pay Reikin? Where does the custom come from?
These questions often arise even among Japanese people. In fact, Reikin used to be a business practice solely in Tokyo and the surrounding area, which was rare in other regions of Japan. For instance, in Osaka, there was a security deposit to pay the landlord, but there was no Reikin custom at least 20 years ago. If you’re wondering why applicants have to pay Reikin as asked and charged, here’s some information that may help to understand it.
In the period of the 17th to 19th centuries, when Tokyo was called Edo, the city’s population was growing drastically. During that time, it was customary for people to rent rooms in a housing complex called Nagaya, a tenement, under an administrative system in which a community was formed as a unit. The owner of the tenement hired an “Ooya (landlord)” to maintain the community, and the Ooya was responsible for taking care of all the tenants. If a tenant got into trouble, the Ooya was supposed to give a hand, sometimes struggled for the solution, and Ooya received money for gratitude, which was the beginning of Reikin. Later, the tenement community system disappeared, but owners began to take on the role of Ooya themselves. Since then, paying the landlord the thank-you money = Ooya, developed into a custom of Reikin. After Edo City turned into Tokyo, the city went through the catastrophic Great Kanto Earthquake and the war, and Tokyo had a severe housing shortage problem. For newcomers it was so thankful and even felt lucky to have a place to live in Tokyo that they started to pay Reikin to the landlord for securing a room.
Reikin vs. Key money?
The Japanese word Reikin is commonly translated to Key money in English as it functions like security money. However, they are slightly, but notably different, making it a little confusing. The problem is, “key money” sometimes refers to a security deposit that may be returned. Reikin is a fee paid for gratitude and is not returnable. Therefore, it is important to know that Reikin means key money, but the fee is not returnable in Japan.
Rental properties With Reikin vs. Without Reikin
Finding Reikin-free rental properties has become easier recently, which means reducing the initial cost of renting is more feasible than ever before. However, properties in favorable conditions, such as being well-equipped, new, and in a good location, usually ask for key money. In addition, rental properties in good condition without a key money requirement may come with a higher rent.
Consider Reikin while looking for a rental property.
When searching for a rental property, you can check the Reikin condition as landlords suggest its requirement. It is important to review the condition before applying. If you refuse to pay key money at the stage of signing a rental contract, you may not be able to reach a contract. It will be difficult to negotiate even if you assert no explanation was given in advance, as the Reikin payment has been contractually customary. When looking for a rental property, be careful not to overlook Reikin and avoid getting into trouble.